As of: March 6, 2024, 9:07 p.m
By: Bona Hyun
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Putin repeatedly tries to circumvent Western sanctions.
It is particularly important for Russia to promote oil trade - successfully?
Moscow – Western sanctions are weakening the economy in Vladimir Putin's country.
The oil sanctions are particularly effective.
However, recent data shows that Putin is still making profits in the oil and gas business.
But the development is unlikely to remain this way in the long term.
Despite sanctions due to the war in Ukraine: Russia records high revenues from oil and gas business
In February 2024, oil and gas trading revenue increased by more than 80 percent to over $10 billion compared to the same month last year.
This was reported by
Bloomberg.
The Russian Finance Ministry said on Tuesday (March 5) that budget revenues from taxes on oil and gas totaled 945.6 billion rubles ($10.4 billion) last month.
Russian President Putin has problems with oil exports.
However, the income is needed for the Ukraine war.
(Archive image) © Gavriil Grigorov/Pool Sputnik Kremlin/AP/dpa
In February 2024, Russia
also paid 127.9 billion rubles in subsidies to its oil refineries for the sale of diesel fuel and gasoline on the domestic market, according to Russian news agency
Interfax .
These payments, which typically reduce oil production revenues, partially compensated oil refiners for the difference between fuel prices on the domestic market and abroad.
Bloomberg
also points out that Russia has gradually reduced export tariffs on oil and oil products starting in 2019 and completely abolished them starting this year.
At the same time, the government increased the oil production tax to compensate for the loss of revenue from export duties.
As a result, Russia's oil production tax revenue reached its highest level in almost two years.
Putin wants to avoid sanctions on oil trade - USA is tightening sanctions
The high income could also be a sign that Putin's evasion tactics are at least partially successful.
According to past reports, Putin is said to have conducted oil transactions through shadow fleets despite sanctions.
These “ghost ships” are freighters that do not come from G7 or EU countries and are not insured for transport, according to a report by the private Kyiv School of Economics (KSE).
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But the USA recently tightened sanctions against Russia and also targeted Putin's shadow fleets.
So the fleet “Sovcomflot” was put on the sanctions list.
For Putin, this could massively restrict opportunities for oil trading and sanctions evasion.
Ships linked to Sovcomflot and its sanctioned unit Sun Ship Management have delivered at least 100 million barrels of crude oil to India since January 2023, according to the
Energy Intelligence
platform .
The EU also imposed sanctions to make Putin's oil business more difficult.
A price cap is intended to force Russia to sell crude oil to buyers in other countries for an initial maximum of 60 US dollars (around 57 euros) per barrel (159 liters).
Russia could lose an important source of income because of the sanctions
The sanctions are having an effect.
Russia's revenue from oil and gas fell significantly in 2023 - a major setback for Putin.
The Russian oil and gas sector is an important source of revenue for the state treasury.
Russia is one of the three largest oil producers in the world.
Russia is highly dependent on oil and gas revenues, which
accounted for 45 percent of the Russian state budget in 2021, according to the
International Energy Agency platform.
In 2021, Russian crude oil and condensate production reached 10.5 million barrels per day, which corresponded to 14 percent of total global supply.
(bohy)